Edition 0013. 05.08.2022. Week of 05.02 - 05.08.2022
This weekly commentary examines the 10 largest companies in the S&P 500, by market capitalization, affectionately called The Generals. We analyze size, price, trend, momentum, and breadth. Having an in-depth understanding of what The Generals are doing leads to an information regarding what the army itself is doing, SPY.
Key Takeaways
Only Berkshire Hathaway remains positive this year-to-date.
The Generals continue to shirk as a percentage of SPY's market capitalization. They have gone from 29.47% to 28.71% to 27.97% and now to 27.40% over the last five weeks.
Last week, 4 of 10 Generals outperformed SPY and closed with a gain. Those were FB, GOOGL, NVDA, and GOOG.
There were more new lows than new highs.
6 of our generals have a smoothed moving average of relative strength, to SPY, that is sloping upwards. That is down from 9 just 3 weeks ago.
Only 2 of 10 generals are in uptrends, though on weakening momentum.
The quantitative model and my subjective trend analysis match.
The General's Market Capitalization & Trend Table
Click here for a guide to the subjective trend. Click the performance table to enlarge.
Source of the weights data: https://www.barchart.com/etfs-funds/quotes/SPY/constituents
Overview
Performance table sorted by the 1-week rate-of-change.
Click here for the performance table guide. Click the performance table to enlarge.
Things here have seriously deteriorated. There are currently 0 Generals in a quantitative uptrend with a positive momentum condition.
There are 0 Generals making a ranked closing high while there are 5 making a ranked closing low.
FB is back in the top 10 largest companies and pushed JNJ back out.
3 or 4, depending on how you look at it, of our 10 Generals, FB, GOOGL, NVDA, and GOOG closed higher last week.
The group has fallen from 17.75%, on average, below its last 52-week high to 25.60% below.
6 of our 10 Generals continue to see their smoothed 40-week simple moving average sloping upwards, though only 3 of them are in the top 40% of their 26-week range.
Year-to-date performance chart.
Click to enlarge.
From a year-to-date perspective, BRK.B has the largest gains with 6.65%, though it has been declining for the last 6 weeks. UNH has fallen below the 0-line, giving back all of its YTD gains. The only other general that is stronger than SPY is APPL, though it is down 11.43% YTD. FB continues to be the group's laggard despite its 2 week rebound.
The Generals geometric average and relative strength.
Click to enlarge.
Top Panel: momentum using Wilder's 10 period Relative Strength Index (RSI).
Middle Panel: a geometric average of the top 16 companies, by cap-weight, in the S&P 500. The geometric average is a form of weighting that minimizes the impact of the highest priced stocks on the average itself.
Bottom Panel: the relative strength chart. The General’s Geometric Average divided by SPY.
The Generals geometric average continued lower below its March 2022 low. Its 40-week simple moving average is now sloping downward.
The relative strength line, against SPY, is still testing its March 2022 lows. Its 40-week simple moving average is now sloping downward. A close lower will confirm a double top in relative strength.
Since the top in RSI made in November 2021, the RSI has fallen below 40 and stayed below 60. This damming evidence, the RSI shifting to its downtrend range, speaks to the probabilities of the Generals Average itself now beginning to downtrend. We are watching for RSI to close below 30.
The Generals geometric average and advance-decline data.
Click to enlarge.
Top panel: same geometric average from above.
Middle panel: the cumulative advance decline line which sums weekly net advancers, advancers minus decliners.
Bottom panel: the advance-decline percentage shows the percent of net advancers as histogram bars with a 10-week simple moving average of the net advancers histogram. This shows breadth thrusts and the strength of the underlying stocks.
The cumulative AD line has broken below its March 2022 low and its 40-week simple moving average has turned down. Breaking below its March 2020 low makes the October 2021 low to the next logical level to watch.
Our net advancers reading is 37.50% meaning 6 of 16 Generals advanced last week. The 10-week simple moving average of The Generals advance-decline percentage remains in neutral territory between 60% and 40%.
The Generals geometric average with percentage above moving average data. Click to enlarge.
Top panel: The Generals Geometric average with its 10-week (blue) and 40-week (red) simple moving averages.
Middle panel: percentage of generals above their 10-week simple moving averages.
Bottom panel: percentage of generals above their 40-week simple moving averages.
The number of generals above their 10-week simple moving averages has fallen to 12.50%, 2 of 16. The number of generals above the 40-week simple moving averages has also fallen and reads 31.25%, 5 of 16.
The Charts
Note: Goog and Googl are very similar, and until there is a change, the analysis of Goog represents both charts.
Apple. Click to enlarge.
AAPL lost 0.23% in value last week and outperformed SPY. Price printed a 4-week closing low. Price is below its upward sloping 40-week simple moving average. We are looking at the $154 level for support. Momentum remains positive but weakening. Relative strength remains flat-ish and holding above its support level. Apple is rangebound above $154.
MSFT. Click to enlarge.
MSFT lost 1.01% in value last week and underperformed SPY. Price continues testing the bottom of its falling wedge below Its downward sloping 40-week simple moving average. A break below the wedge points to the $265 - $267 zone which is the 38.2% Fibonacci retracement of the March 2020 Covid-low to the November 2021 peak. Momentum is decidedly negative. Relative strength broke its coil to the downside, broke back inside, but was rejected from its still upward sloping smoothed 40-week simple moving average. MSFT is in an intermediate term downtrend.
Alphabet. Click to enlarge.
Goog gained 0.60% in value last week and outperformed SPY. Price remains well below its downward sloping 40-week simple moving average. Price continues to test its 38.2% Fibonacci retracement level from the 2020 Covid-low to the November 2021 high. Momentum is negative, and relative strength has broken down from its coil. It’s smoothed 40-week simple moving average is sloping downward. Goog is in an intermediate term downtrend.
Amazon. Click to enlarge.
Amazon lost 7.65% in value last week and underperformed SPY. Price printed a 4-week closing low as it sliced through its 61.8% Fibonacci retracement level. The next logical level of support is around $2,135 which is the Pre-Covid price high. Momentum is negative. Relative strength is negative and making multi-year lows. AMZN is in a downtrend.
Tesla. Click to enlarge.
TSLA lose 0.59% in value last week and underperformed SPY. Price printed a 4-week closing low. Price is below Its upward sloping 40-week simple moving average. Momentum is quickly heading to its 0-line. Relative strength remains above its upward sloping smoothed 4-week simple moving average. It does have a bit of a filed breakout look. TSLA’s intermediate term trend is down.
Meta Platforms. Click to enlarge.
FB gain 1.65% in value last week and outperformed SPY. Price remains below $207 which is below its pre-Covid high of $222. Momentum and relative strength look to have stabilized, for now.
Nvidia. Click to enlarge.
NVDA gained 0.69% in value last week and outperformed SPY. Price has broken below the $195.50 area, so we look to the logical level of $160 which is its 61.8% Fibonacci retracement level from its March 2020 lows to its November 2021 highs. Momentum is negative. Relative strength ha been headed lower since it peaked in November 2021. Now it is at a key level and on the verge of breaking down. NVDA’s intermediate term trend is down.
Berkshire Hathaway. Click to enlarge.
The famed Berkshire Hathaway lost 2.55% in value last week. Price continues to revert towards its trendline and upward sloping 40-week simple moving average. Price printed a 4-week closing low. Momentum is testing its upward sloping trendline from above. Relative strength has been flat for the last 3 weeks, but is in an uptrend. BRK.B is in an uptrend.
UnitedHealth Group. Click to enlarge.
UNH lost 1.76% in value last week and underperformed SPY. Price printed a 4-week closing low. Price remains above its 261.8% Fibonacci extension from its pre-Covid peak to its Covid lows. Momentum and relative strength remain above their upward sloping trendlines. Price is in an uptrend.
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